Pharma and biotech in developed Asia has been among the region’s worst performing industry groups in the last year, but our research suggests that their recent underperformance may be somewhat overblown. Recent performance places these companies squarely in the bottom fifth of industry groups for...
In recent reports, we’ve been highlighting that innovation—as a factor represented by R&D as % of sales—has stopped underperforming and it is selling for an attractive valuation. We used the S&P 500, Russell 2000 and other off-the-shelf indexes. Today we will highlight one of our...
The most innovative companies in the world tend to exhibit two highly desirable characteristics: high return on invested capital (ROIC) and low long-term debt as a percentage of total capital. There are fundamental reasons for these characteristics. First, innovative companies are very profitable because they...
Profitability and investment are inextricably linked through time. A company's investment decisions today will ultimately drive its profitability level tomorrow. The fruits of a company's investment decisions eventually show up in profitability metrics such as free cash flow margin, operating cash flow margin, and return...
One the primary reasons we adjust financial statements to include intangible assets is have a more realistic lens to view every company with. Investment in intangible assets such as R&D, employee training and brand equity create sustainable, competitive advantages that result in higher market share...
We focus a lot of our time on stock valuation because we believe that valuations are one of the best long-term indicators for future returns. When valuations are high, future returns tend to be lower and when valuations are low, future returns tend to be...
For most investors, investments in research and development (R&D) and investments in other intangible assets such as brand building, employee training and codified information are overlooked and misunderstood. Current business accounting standards contribute to this misunderstanding by treating intangible investments as current period expenses rather...
As another relatively quiet week in the market comes to a close, we thought we would step back from analyzing the market and briefly introduce to our readers a topic that we care greatly about and one that most of our readers are probably unfamiliar...
